Human Resources Legislative Update
Federal Pension Regulations in Effect April 1, 2011
Date: March 25, 2011
On April 1, 2011, regulatory amendments to the Pension Benefits Standards Regulations, 1985 will come into force. These amendments support the changes to the Pension Benefits Standards Act, 1985 (PBSA) made by Bill C-9, which is discussed here.
As previously reported, these amendments will:
- permit plan sponsors to secure properly structured letters of credit in lieu of making solvency payments to the pension fund, up to a limit of 15% of plan assets;
- require the plan sponsor to fully fund pension benefits on plan termination;
- void any amendments to a pension plan that would reduce the solvency ratio of the pension plan if the plan’s solvency ratio would be below a ratio of 0.85; and
- permit sponsors, plan members and retirees of a distressed pension plan to negotiate their own funding arrangements to facilitate a plan restructuring.
Further amendments to the Pension Benefits Standards Regulations, 1985 are required to support additional amendments to the PBSA made in Bill C-47, which is discussed here.